Oil prices rose as much as 3% on Wednesday before paring gains on concerns about supply disruptions caused by Middle East conflicts.
Prices fell from their highs by midday trading after Russia’s oil alliance OPEC+ signaled it would carry out plans to add supplies to the market in December. Last week’s U.S. government data also showed an unexpected rise.
West Texas Intermediate (CL=F) rose slightly, trading at just over $70 a barrel as of midnight ET. Brent (BZ=F), the international standard price, has also risen and is hovering around $73 per barrel.
Wednesday’s move comes after Iran launched around 200 ballistic missiles in response to Israeli ground air strikes in southern Lebanon that targeted Iranian-backed militants, temporarily suspended during the previous deal. This was in response to a 5% increase in the stock price.
Dennis Kistler, BOK Financial’s senior vice president of trading, said in a note to clients on Wednesday that the fund’s large-scale “Significant short covering continues, and crude oil trading has risen significantly.” .
Israeli officials said retaliation could include targeting Iranian oil production facilities, Axios reported. Iran produces about 3 million barrels of oil per day.
Goldman Sachs analysts said Wednesday that investors are also concerned about disruption risks from “the potential for further reductions in Red Sea crude flows.” The waterway between Africa and the Arabian Peninsula has been a hotspot for rebel attacks this year in response to the Israel-Hamas war.
The crude oil tanker ENERGY COMMANDER is anchored off the coast of the port of Limassol in the Mediterranean Sea. Cyprus, Monday, April 22, 2024. (Danil Shamkin/NurPhoto via Getty Images) (NurPhoto via Getty Images)
Crude oil futures pared gains in trading after the latest government data released Wednesday showed U.S. inventories unexpectedly rose last week.
Prices also reacted to comments from Russian Deputy Prime Minister Alexander Novak, who indicated that oil alliance OPEC+ would continue with plans to start increasing production from December.
Futures markets fell last week after reports that oil alliance leader Saudi Arabia is determined to begin lifting voluntary production cuts later this year, even if it leads to a fall in oil prices. did.
The Organization of the Petroleum Exporting Countries and its producing allies are cutting production starting in 2022. Despite the group’s pledges, some member countries have produced more than their quotas this year.
“The market has been selling off over the past few months as it became clear that OPEC+ countries were cheating on their production quotas,” Ed Haas, a senior research fellow at the University of Houston, told Yahoo Finance on Wednesday. he said.
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on Twitter @ines_ferre.
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